Abstract: In the engineering application of navigation system, high order filter can bring a heavy burden to navigation computer, and also bring serious mode error, which will influence the filter's accuracy and performance. This paper mainly introduces the design and realization of reduced order kalman filter for the low-cost Strapdown Inertial Attitude and Heading Reference System (SIAHRS). The structure of the low order filter is presented, which mainly aim at the SIAHRS, and its yaw can be modified through magnetic sensor. This paper discusses SIAHRS's composition in which the reduce order filter is actually used.The result indicates that the presented reduce order filter can ensure accuracy of SIAHRS, and has great value of application with widely prospects.